Transportation Planning Casebook/Stockholm Cordon Tolls

In 2006, a tax cordon around much of the City of Stockholm was implemented. Congestion had been a problem in the city for some time, and for years traffic flow into the downtown area had not increased.

To mitigate this congestion, a tax was charged on most types of vehicles crossing the cordon at a relatively low rate. Prior to implementation, the tax was of much political debate. People outside the cordon largely opposed the tax. Once people inside the tax cordon were involved, the results changed as they showed large support for the tax.

Those who live within the tax cordon tended to cross the cordon less often than those who commuted daily from suburbs or other areas to the city for work. Those people also would experience lower demand for their local roads and this is a possible reason for their support of the tax.

Contents

Road pricing is a generic term which refers to a charge for using a road. Such a policy involves imposition of a fee for operating a motor vehicle on a roadway facility in order to generate revenue, manage traffic demand, or reduce environmental impacts associated with traffic congestion.[1][2]

Three types of road pricing based on the purpose are recognized. In congestion or value pricing the main goal is managing demand to reduce congestion and/or retain targeted travel speed.[3] Congestion pricing works by shifting some less critical rush-hour highway travels to other transportation modes or to off-peak periods.[4] The main purpose in tolling is to generate revenue to cover the costs of infrastructures construction and/or operations. Environmental pricing aims to reduce environmental impacts of traffic (i.e. emission).[3]

Road pricing is also categorized using the scale of its application [3]:

Facility-based Pricing: when charges are imposed over specific roadway facilities (e.g. bridges and tunnels) or dedicated lanes on these facilities (e.g. HOT lanes).

Zone-based (area or cordon) pricing: when there are charges to drive within (area) or into (cordon) a congested urban area (as in London, Stockholm and Singapore).

Distance-based charges: when per-mile charges are levied on vehicles on roads within a specified region or country (as in the Czech Republic and Germany).

In all cases charging rates may vary by time of day (versus flat tolls), traffic volumes and vehicle types.[3] Fix charges are basically used in cases with revenue generation purpose while variable tolls are more appropriate for traffic demand management strategies.[4]

Today, tolls are collected at highway speeds by using electronic toll-collection technology. Vehicles are equipped with electronic devices called transponders or "tags", which are read by overhead antennas or gantries.[4] This system which is called Dedicated Short-Range Communication (DSRC) is implemented in Singapore, Germany and Czech Republic.[3] Simple types of tags or In-vehicle Units (IU) are affordable for less than $10.[4]

Global positioning systems (GPS) are used to calculate mileage traveled by trucks in Germany on the autobahns.[3][4] A Global System for Mobile Communications (GSM) is also needed for data transmission in this method of tolls collection.[3] The costs of such systems are currently high as much as $500 per vehicle in Germany. Some additional services such as in-vehicle navigation and commercial fleet management are also provided to make these high costs justifiable.[4]

Cameras are an essential complement to both DSRC and GPS systems to capture an evidence of the identity of vehicles that do not have a working tag or GPS unit. So, this component is known as an enforcement tool.[4] More sophisticated cameras which are able to recognize the plate number of cars can be used independently (without having DSRC) for collecting tolls. This technology known as Automated Number Plate Recognition (ANPR) is currently used in London and Stockholm congestion pricing. Users have a specified time to pay the charge; otherwise they will be fined by an incremental penalty scheme.[3]

Map showing the results of the referendum in each municipality. 'Yes'-majority. 'No'-majority. No referendum held.

A referendum was held on September 17, 2006 on whether to permanently implement the congestion tax. Although the reigning government stated that only the results from Stockholm Municipality would be considered, surrounding municipalities held their own referendums. The opposition parties stated they would consider these results if they won power. They proceeded to win the election, but announced in October 2006 that they would implement the congestion tax permanently.[5]

The tax is imposed only between the hours of 6:30 AM and 6:30 PM Monday thru Friday. The charge could be anywhere from 10 kronor to 20 kronor for each crossing of the tax cordon, and a vehicle can accrue a maximum of 60 kronor in charges per day.[6]

The tax is not imposed on public holidays or during the month of July, and obviously not on weekends. There are also many vehicles that are exempt from the tax, such as emergency vehicles or public busses. Other types of vehicles used to be exempt, such as alternative-fuel vehicles. Research indicates this had caused a much higher percentage of alternative-fuel vehicles to cross the cordon than regular vehicles.[7] In fact, about 28 percent of all tax cordon crossing's are exempt.[8]

These decisions come as the result of a seven-month study period, in which the tax was an experiment.[6] Today, the tax is a permanent installation. In the table below, the charge by time of day is shown (for days in which the tax is levied).

Residents of the Island of Lidingö, who can access the rest of Sweden only through the CBD, have 30 minutes to exit the area; otherwise the charges are applied.

28 percent of all passages across the congestion tax cordon are made by exempted. The proportion of passages made by Green cars has increased from 3 percent in the trial to 13 percent in 2008. It turned out that alternative fuel vehicles make on average 70 percent more journeys over the congestion tax cordon than the average for taxable vehicles. In addition, the increasing number of alternative fuel vehicles is probably another reason for the increase in trafﬁc across the congestion tax cordon in 2008 compared to the trial in 2006. For these reasons the exemption for alternative fuel vehicles ceased in July 2012 [6]. Note that reducing congestion is the primary policy goal while reducing emissions is the secondary purpose.

During the 6 month congestion tax trial period, Stockholm saw a 22% decrease in the number of vehicle crossings into the city center.[8] After the trial period, crossings rose significantly, but never reached original levels. This remaining decline could have been due to road construction on two major brides.[6] Another possible factor being commuter habit. Travelers became accustomed to their new mode of commuting from the trial period.

Comparing 2008 levels (a year after permanent implementation) to 2005, reveals an 18% reduction in cordon vehicle crossings. Data from late 2007 and early 2009 reveal a similar trend. The greater vehicle crossing reduction during the trial 2006 has several possible explanations. Unusually large snowfall may have dissuaded commuters from driving. Travelers may have also required time to adapt to the system originally, contributing to the large decline in traffic.[8]

Traffic Volume Comparison

The decline in car journeys across the cordon in 2008 compared to 2005 amounted to 96,000 per taxable day.[8] Nearly half of these trips were work or school trips, with the remaining consisting mostly of discretionary travel. Almost all work and school trips mode shifted to transit. Discretionary trips on the other hand were primarily moved out of the peak period, eliminated altogether or avoided crossing the cordon. No significant increase in car-pooling or telecommuting was seen.[6]

Traffic levels within the inner city saw a smaller decrease than cordon crossings.[6] Drivers are charged only for crossing the cordon, but travel within the inner city is not charged a tax. With an overall reduction in congestion levels, this likely led to some convergence. Drivers within the inner city took advantage of the additional capacity created by the congestion tax.

Orbital roads in 2008 saw a 5-10% increase in traffic compared to 2005. This increase is partly caused by an overall rise in traffic, but also caused by commuters avoiding cordon crossings.[8]

Transit ridership numbers in 2008 show 80,000 more journeys across the cordon per taxable day than in 2005. This represents a 7% increase in transit ridership. Roughly half of this increase can be attributed to population growth.[8] Additional factors, such as changes in gas prices, business-cycle effects and expanded transit ridership, also contributed to the increase.[6] Nevertheless, a clear car to transit mode shift can be observed for work and school commuters. At least a third of the increased ridership is likely due to implementation of the congestion tax.[6]

Travel time measurements were primarily done by a camera system.[8] An overall reduction in travel times on various road types is seen during the trial period. This is not surprising given the lower car volumes.

Measurements to quantify environmental changes inside the cordon were conducted. The Stockholm Traffic Administration estimated that a 10-14% decrease in CO2 emissions from vehicles occurred during the congestion tax trial period. Since permanent implementation, estimates show a 4% further reduction.[8] The decrease in CO2 emissions is largely due to the increase in alternative vehicles. Some of it can be credited to decreased traffic volumes. However, some of the reduction in car emissions is offset by the increased bus service. The congestion tax is likely the greatest driving factor behind the rapid increase in alternative vehicle use. Alternative vehicles are allowed to pass the cordon free of charge. Although, the 9% increase in alternative vehicle use cannot be solely attributed to the congestion tax.[8] An increase in ownership would have likely occurred regardless of the tax exemption.

There is no significant evidence of economic consequences to Stockholm businesses resulting from the congestion tax. Observed changes are within normal price variations. The rest of Stockholm county was used as a control in comparing economic changes within the city. Researchers suggest the lack of impact on retail is due to the limited effect the congestion tax has on disposable income, estimated around 0.1%.[6] However, if this is the case, one would expect drivers to be inelastic in their behavior. Another explanation is that many discretionary trips were moved to off peak hours and not completely eliminated.

Prior to implementation in 2007, there was a trial period (January–July 2006) and a referendum in September 2006 to decide on implementation. Those who pay the cordon tax the most frequently are on average of higher income and have greater car ownership.[8] Many of these tax payers live in areas surrounding the inner city where household incomes are higher.

Residents living within the tax cordon voted in favor of the referendum. Those same residents were in even greater support of the tax in 2007 than before the tax was implemented.[8]

Owners of Exempted Vehicles

"Exempted vehicles" cross the cordon an average of 12 times per two week period, compared to seven times for a taxable vehicle. This was a statistically significant increase.[8]

Public Transportation Companies

Public transportation use increased across the tax cordon by 6%.[6] However a quarter of that increase was due to increased employment, population, and fuel prices according to the study.[6] Nevertheless, this is still a 4.5% increase in public transportation use that could be the result of the cordon tax. Six of seven bus routes crossing the tax cordon have experienced decreased bus journey routes, even despite the increase in ridership.[6]

Taxpayers of Stockholm

While the benefit to the taxpayers can be of much debate, the net social benefit was calculated to be about 650 mSEK/year (about 100 mUSD/year) according to a study published in Transportation Research Part A.[6]

According to a report, business has had consistent turnover from before and after the tax implementation, and with respect to the rest of Stockholm county.[8] In fact, retail and wholesale sectors exhibited increased turnover within the tax cordon.[8]

It is worth nothing that the number of opponents to the tax has drastically decreased since implementation (and even more so since the beginning of the trial period.[10] There were only a few episodes of violence or protesting on the first few days of the trial period. Ever since, there has been no opposition beyond opinions expressed in public polling.[11]

Irony exists in the fact that the political party that supported and initiated the project (the tax cordon) was voted out of power at the same time as public polling began to approve of the congestion charging scheme.[10]

According to a report, the revenues are reinvested in improvements to the road network in the Stockholm region. This had not been the plan during the trial period, as at that point it had been stated that the revenues would go entirely to improving public transport in Stockholm.[12]

The tax was implemented as a state tax, because in Sweden a municipality cannot collect taxes from the inhabitants of another municipality. Because inhabitants would come from other locations and be taxed in the City of Stockholm, the tax could only be levied on Stockholmers, or be implemented as a state tax. But with the tax classified as a state tax, the redistribution of those revenues is complicated. Due to changing political parties as well as other factors, the revenues have not always found their way back to Stockholm.[12]

Two other successful congestion pricing projects are those implemented in London and Singapore. There are some similarities and differences between them which are useful to be pointed out.

Managing congestion is the primary purpose in all three cities while transit promotion and emission reduction are secondary.[3]

Stockholm operates a cordon pricing while Singapore uses cordon as well as facility-based pricing and London uses area pricing. Exactly for this reason, London had to procure too many cameras in comparison with Stockholm. London conducts 348 sites along the cordon and within the area plus some patrols roving the zone capturing live videos of the license plates of all vehicles whereas Stockholm controls only 18 gantries. The charges vary by time of day in Stockholm and Singapore While there is a flat rate of £8 per day in London. In Singapore fees even varies by vehicle type.[3]

Stockholm and London apply ANPR technology to control the zone and collect the tolls. Singapore uses the DSRC and transponders to do this but at the same time ANPR system is used as enforcement tool. So Singapore has required more infrastructures and naturally more capital and also operating costs. Stockholm applied the DSRC and transponder system too during the trial period. But then, officials decided that the ANPR system performed sufficiently that the transponder-based option is not necessary. So it was eliminated in the permanent program to reduce overall system operating costs. Stockholm and London has defined some exemption rules based on their own policies and/or characteristics. Unlike in Stockholm and London, no vehicles are exempt from the charge in Singapore, except emergency and military vehicles because of the tough geographical conditions.[3]

Net revenues generated in Stockholm were allocated to transit and new roads in and around the city. In London 82 percent of it was used for bus improvement, 9 percent for roads and bridges, and the remaining 9 percent for other transport improvements within greater London. In Singapore, though, a portion of net revenues returned to vehicle owners through periodic rebates on vehicle taxes and the rest were invested in transit and highway systems.[3] This refunding gave rise to a valuable public acceptance for the pricing program.

↑Small, Kenneth A. and José A. Gomez-Ibañez, “Road Pricing for Congestion Management: The Transition from Theory to Policy”, The University of California Transportation Center, University of California at Berkeley, pp 213-246, 1998.